Empire Ins. Companies v. National Union Fire Ins. Co.

• Decision Date: 05 June 1986
• Docket Number: No. 85-146,85-146
• Citation: 512 A.2d 1100,128 N.H. 171
• Parties: The EMPIRE INSURANCE COMPANIES, v. NATIONAL UNION FIRE INSURANCE COMPANY.
• Court: New Hampshire Supreme Court

Page 1100

512 A.2d 1100

128 N.H. 171

The EMPIRE INSURANCE COMPANIES, v.NATIONAL UNION FIRE INSURANCE COMPANY.

No. 85-146.

Supreme Court of New Hampshire.

June 5, 1986.

Ransmeier & Spellman, Concord (Steven E. Hengen(orally) and Diane L. Perin on the brief), for Empire Ins. Companies.

Hermann & Harkinson, Manchester (Robert L. Hermann, Jr., on the brief and orally), for Nat. Union Fire Ins. Co.

SOUTER, Justice.

This is an appeal and cross-appeal from a declaratory judgment under RSA 491:22, determining coverage under a liability policy issued to a carnival operator in order to satisfy the operator's statutory obligation to obtain minimum liability coverage.RSA 321-A:5, III.The policy issued by the plaintiff excludes coverage if its named insured (1) operates a carnival attraction as an independent contractor in association with another carnival or amusement park owner or operator, and (2) is an insured under a separate "legal liability policy" issued to that other owner or operator.The Superior Court(Temple, J.) found that the exclusion was applicable on the facts of the case and concluded that its enforcement would not defeat the minimum coverage requirement.The court nonetheless ruled that the exclusion was void, because its application in other circumstances could result in coverage below the minimum.We affirm the finding that the exclusion applies, but reverse the ruling that it is void.

The Rochester Agricultural and Mechanical Association granted the defendantColeman Brothers' Shows, Inc. an exclusive concession to operate rides and shows in the midway of the 1981 Rochester Fair.Under this agreement, Coleman operated certain amusement devices itself, but it also rented midway space to the defendantMarc's Amusements, Inc., which owned and operated a ride called the "yo-yo-can."

It is undisputed that March's was thus "an operator of carnival equipment or an amusement device" within the meaning of RSA 321-A:5, III, and was consequently obligated under that statute to obtain liability coverage "in a minimum amount of $300,000 per person and $1,000,000 aggregate."The plaintiff, The Empire Insurance Companies, issued such a policy to Marc's, but subject to this exclusion:

"[t]his insurance does not apply:

(a) If an occurrence takes place while the named insured is operating a carnival attraction as an independent contractor in association with a carnival, circus or amusement park owner or operator and if such carnival, circus or amusement park owner or operator has provided a legal liability policy with bodily injury coverage under the terms of which the named insured under this insurance is an insured under such other policy with respect to such occurrence."

Coleman obtained its own liability coverage from the defendantNational Union Fire Insurance Company, which issued a policy describing Coleman as a "carnival operator," and which included "owners of any booked rides, carnival attractions or leased attractions" as additional insureds.All parties agree that Marc's was thus an additional insured under the National Union policy.

Each policy was in force on September 27, 1981, when Sherry Long was allegedly injured while riding on Marc's yo-yo-can.After Long brought a personal injury action against Marc's and Coleman, Empire brought this petition, seeking a declaratory judgment that the quoted policy exclusion relieved it of any obligation to defend and indemnify Marc's.The parties litigated two issues, whether Coleman was a "carnival ... operator" within the meaning of the exclusion, and whether the exclusion is enforceable.National Union appeals fromthe trial court's finding that Coleman was such an operator, and Empire appeals the court's ruling that the exclusion is void.

By its terms the exclusion applies only if Marc's was insured under another policy issued to a "carnival ... operator."Surprisingly, given the facts of the case, National Union argues that Coleman was not a carnival operator at the time in question, because Coleman's carnival midway "operation ... was an integral part of a 'Fair' ... 'consisting of displays of farm and home products, and various competitions and entertainments[.]'American Heritage Dictionary 471 (1975)."

National Union's argument assumes that a carnival loses its identity in the context of a fair.While there are those who might wish this were so, it is not.Nor is there any reason to believe that the parties to Empire's insurance contract intended "carnival" to describe something different from the midway at a typical fair.Therefore, applying the policy language as a reasonable person would construe it, seeSpaulding v. Concord Gen. Mut. Ins. Co., 122 N.H. 515, 516, 446 A.2d 1172, 1173(1982), Coleman was obviously the operator of a carnival at the time in question, albeit a carnival that formed the midway of a county fair, and the trial court was therefore, correct.The court's conclusion could not, in any event, have come as much of a surprise to National Union, which had described Coleman as a "carnival operator" for purposes of its own policy.

There is a more serious question, however, about the enforceability of Empire's exclusion.As we have seen, it would apply...